Vietnam's logistics heavyweight Gemadept raises $118 mln for asset purchases, debt repayment

Gemadept Corporation, a leading port and logistics company in Vietnam, has successfully sold 102.7 million shares to existing shareholders at the price of VND29,000 ($1.14) apiece, raising VND2,978 billion ($117.3 million).

The company, listed on the Ho Chi Minh Stock Exchange as GMD, also distributed 797,286 unsold shares to two investors, Agribank Securities and Phan Van Tuan, at VND45,000 ($1.77) per share.

Of the total VND3,000 billion ($118.2 million) raised, VND2,213 billion will be used to acquire three 1,800 TEU ships, two STS cranes with 85-ton lifting capacity each, and seven barges with 248 TEU capacity each.

About VND231 billion will be for repaying bank loans, and VND558 billion for expanding its stake in Nam Dinh Vu Port JSC – a subsidiary in which it holds a 60% stake.

Gemadept is the only listed company in Vietnam that owns and operates a port system spanning from the North to the South, offering a wide range of services from dry ports to river and seaports.

Notably, it owns Gemalink, one of the largest deep-water ports in the country and ranked among the top 19 global ports capable of accommodating megaships.

In the logistics sector, the firm operates a network of distribution centers offering a range of services, including air cargo handling, warehousing, heavy-lift transportation, maritime and waterway logistics, cold chain logistics, and automobile logistics.

As of end-Q3/2024, Gemadept's total assets had reached VND14,366 billion ($565.8 million), primarily consisting of fixed assets and investments in subsidiaries.

The company has significant capital needs for its ongoing port projects, including the second phase of Gemalink in the southern province of Ba Ria-Vung Tau and the third phase of Nam Dinh Vu Port in the northern city of Hai Phong.

Gemadept reported it is finalizing required procedures and arranging funds to begin construction on the Gemalink-Phase 2, with phase 2A expected to be operational by 2026.

The Nam Dinh Vu Port project consists of three phases, with phase 1 operational from 2018, phase 2 from 2023, and phase 3 under construction. Phase 3, with an estimated investment of VND2,500 billion ($98.5 million), will increase the total capacity of Nam Dinh Vu Port to nearly 2 million TEUs.

In terms of financial performance, Gemadept posted a 21.4% year-on-year increase in revenue to VND3,420 billion ($134.7 million) for the first nine months of 2024, completing 86% of the year's target.

However, its after-tax profit fell by 33% to VND1,549 billion ($61 million), primarily due to a one-off financial gain from the divestment of Nam Hai Dinh Vu Port in the same period last year.

The port business accounted for 85% of the total revenue, reaching VND2,924 billion ($115.2 million), up 38% year-on-year. In contrast, logistics and office leasing revenue declined by 28% to VND497 billion ($19.6 million).

The gross profit margin of the port segment improved from 45.7% to 47.4%, while that of logistics and office leasing saw a sharp drop from 55% to 29.3%.

Gemadept said it handled over 3 million TEUs through its port system in the first nine months of 2024, up 50% year-on-year.

In the logistics segment, growth in global containerized freight and transportation services slowed down through September. The maritime transport market has been volatile, impacted by the Middle East conflict, the Red Sea dispute, and strikes at U.S. ports.

The delivery of new vessels reached record levels, with new supply increasing ahead of changes in some maritime alliances in January 2025. Giants Maersk and MSC in January 2023 announced they will discontinue the 2M alliance, set to end in January 2025.

The charter market remained active with many new and renewed contracts. Shipping rates, which surged in Q2, have gradually been adjusted downward, with longer transit times impacting demand, especially on Asia-Europe and Asia-North America routes.

After a significant surge in the share price from VND14,400 apiece in May 2020 to VND71,600 ($2.82) in March 2024, GMD has gone down to VND66,000 over the past few months. Despite this, the current price is still significantly higher than that offered to existing shareholders and other investors.

The ticker closed Wednesday at VND65,900 ($2.6) per share.